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Comments on: Stupid Senate Tricks https://whynow.dumka.us/2008/04/14/stupid-senate-tricks/ On-line Opinion Magazine...OK, it's a blog Fri, 18 Apr 2008 00:25:58 +0000 hourly 1 https://wordpress.org/?v=6.4.3 By: Bryan https://whynow.dumka.us/2008/04/14/stupid-senate-tricks/comment-page-1/#comment-35732 Fri, 18 Apr 2008 00:25:58 +0000 http://whynow.dumka.us/?p=4055#comment-35732 Oh, more and more people have discovered that the banks don’t have the loans, and, in Florida, they can’t foreclose unless they have the loans and the original paperwork, so a lot of people with really expensive mortgages have just stopped paying anything. As long as people demand the paperwork, foreclosure is a nightmare for banks in Florida. Once the issue is brought up, everything grinds to a halt waiting for the bank to prove standing for foreclosure.

It may work that way in other states too, but most people don’t challenge the banks. The investors would have to seek foreclosure in Florida, if anyone can figure out where the original mortgage is.

]]> By: Badtux https://whynow.dumka.us/2008/04/14/stupid-senate-tricks/comment-page-1/#comment-35731 Thu, 17 Apr 2008 21:54:14 +0000 http://whynow.dumka.us/?p=4055#comment-35731 But the banks don’t own the loans in foreclosure, they only service them. To re-negotiate the terms would require buying back the loan from the securitization pool that currently owns it, which would be way too much hassle since it would require permission from the investors in the securitization pool. So the bank forecloses, and the investors get the shaft, but what the hey, it’s not the bank’s money. Or at least that’s the plan.

Note that not *all* banks turned around and sold off those toxic loans to securitization pools, e.g. Wells Fargo is in trouble right now because they actually held on to most of their toxic loans, and for other banks there’s clauses in the sales contracts where the banks have to buy back the loan if it fails to perform within a certain period, which killed several of the sub-prime lendors when the investors forced them to take back worthless loans. But the the banks in general have the leverage and know-how to drag things out to the point where it’s no longer the banks’ problem if the loan goes to foreclosure. Heck, they even get to take service fees out of the foreclosure proceeds for their services in foreclosing the home on behalf of the investors!

— Badtux the Mortgage Penguin

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